A new set of tax law amendments make it possible for the South African Revenue Service (SARS) to impose criminal sanctions on taxpayers who neglect their tax affairs. The amendments, signed by President Cyril Ramaphosa and promulgated on 20 January 2021, makes unintentional tax errors punishable by a fine or imprisonment.
This is a step away from the previous legislation where taxpayers could only be fined or sent to jail if their transgression were committed “willfully and without just cause”.
“The law previously required an element of intent. If negligence or ignorance caused your administrative non-compliance, you would have gotten off with a slap on the wrist,” said Tax Consulting SA attorney Roxanna Naidoo.
With the new legislation in place, however, your intention does not matter. Where you negligently fail to comply or make mistakes on your taxes, you commit an imprisonable criminal offence,” said Naidoo.
Ignorance, a defence commonly used by taxpayers, will also not cut the mustard under the new legislation. Commenting on the tax amendment legislation, SARS commissioner Edward Kieswetter said this is not a new concept in law.
He highlighted that this is an international practice. “In countries like Australia, Canada, and New Zealand intent is not required to prosecute tax offences.
The new laws are, however, not a licence for SARS to throw anyone in jail for not fulfilling a tax obligation. To successfully prosecute someone, the state must still prove ‘blameworthiness’ beyond reasonable doubt. This can be done on two principles:
Proving negligence, where you had knowledge of the transgression but ignored to apply the knowledge. Intent, where you chose intentionally ignore application of the law.
“It is therefore not a free-for-all for SARS. The state still has to prove blameworthiness,” Kieswetter said. He added that SARS’s approach and strategic intent to deal with tax-related issues are.
Provide clarity and certainty to taxpayers about their tax obligations.
Make it easy to fulfil their tax obligations. If SARS detects non-compliance, for any reason, whether it is negligent or with intent, it will respond using all instruments in law. Our approach is not to catch taxpayers doing something wrong, but always to assist them to do the right thing,” Kieswetter said.
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Source: mybroadband
